Pensions

Tax

You Must Make A Will - Advice From Isis Financial Planners, Independent Financial Advisers

The single most important piece of advice we can give you is to make a will. Even if you are married or in a civil partnership not all of your worldly goods will end up with the right person/people if you haven't got a valid will. Should you die without a will you will be deemed to have died 'intestate' and your estate (your assets) will be distributed in accordance with the laws of intestacy.

For anyone who is married with children, the spouse is entitled to the deceased’s personal property and belongings plus the first £250,000 and half the remaining estate. If there are no children or remoter issue, a spouse or civil partner will receive the whole of the deceased's estate.

The problem is far greater if anyone with an unmarried partner (including same sex couples) dies because the laws of intestacy simply doesn't recognise unmarried partners as having any legal status. There is no such thing as a 'common law husband or wife'. This means that if you die intestate your partner is bypassed completely and your estate is given to children if there are any, or parents and siblings. Even your least favourite uncle and aunt could end up with your hard earned cash at the expense of your partner.

Proper legal advice is vital especially if your personal circumstances are complicated in any way. You might think you have a valid will in place but marriage or divorce will invalidate any wills in existence and you must make a new will (but not in Scotland).

You will need to appoint executors to distribute your assets in the event of your death. This can be a professional person such as your solicitor, or, more usually, close friends or relations - people that know you well and are broadly aware of your wishes.

Everyone has an inheritance tax nil rate band of £325,000. Spouses and civil partners can ‘inherit’ a deceased partner’s inheritance tax nil rate band – meaning that up to £650,000 can be inherited free of any tax on the death of the second spouse. If the first one to have died used any of their nil rate band this is taken into account. People that have been married more than once can inherit the nil rate band of more than one deceased spouse, but the total inherited can never exceed 100% of the nil rate band available.

Furthermore, a special residence nil rate band is available if a property is bequeathed to children. As with the normal nil rate band, this is transferable between married couples and civil partners so that, on the second death, two residence nil rate bands are available.

The residence nil rate band is currently £125,000 per person but will rise over the next two years to £175,000 by 2020, thus fulfilling the Government’s promise to take £1m of a couple’s joint estate out of tax altogether.

The relief is complicated and there are a number of rules and restrictions, especially for those with large estates.

Isis Financial Planners Ltd doesn't offer a will writing service - we prefer to leave that to the professionals, solicitors. The following three companies will be able to help: